The court emphasized the importance of adhering to principles of natural justice and held that a demand made under section 179 of the Income Tax Act, 1961, must be preceded by a valid assessment order.

The petitioner is aggrieved against the order made under section 179 of the Income Tax Act,1961 dated 19.07.2018. Consequently, the petitioner seeks for a direction to the respondent to defreeze the petitioner's bank accounts, bearing No.781010100000019 with Axis Bank, Saidapet Branch, Chennai, bearing Nos.000101083031 (NRO) and 000101235193 (NRE) with ICICI Bank, Cenotaph Road Branch, Chennai and bearing No.37680100000025 with Bank of Baroda, Adyar Branch, Chennai.

2. The case of the petitioner is as follows:

The petitioner is a Director of a Company called M/s. Info drive Software Limited, a Public Limited Company. An order of assessment was passed against the said Company in respect of the assessment years 2010-11 and 2011-12 dated 15.12.2011. The said Company filed an Appeal before the CIT Appeals, challenging the said assessment order. The First Appellate Authority dismissed the Appeal on 01.01.2014. Challenging the same, the said Company filed further appeal before the Income Tax Appellate Tribunal in ITA.Nos.397 and 398/Mds/2014. The Tribunal, by order dated 30.06.2017, set aside the assessment orders and remitted the matter back to the Assessing Officer for deciding certain issues discussed therein and for giving definite findings after allowing the assessee, a reasonable opportunity to state and present its present case before the Assessing Officer. Thereafter, the Assessing Officer has not passed a fresh order of assessment till this date. On the other hand, the present impugned order under section 179 of the said Act is passed calling upon the petitioner to pay the entire arrears of demand within ten days. Before passing the said order, the petitioner was not issued with any show cause notice. Proceedings under Section 179 of the said Act is maintainable only against the Director of a Private Company and not against the Director of a Public Limited Company. Therefore, the impugned proceedings is without jurisdiction.

3. A counter affidavit is filed by raising very many contentions on merits of the demand made against the petitioner by going into the merits of the assessment already made. Apart from saying so, it is stated that the Appellate Tribunal has only restored the issue referred to therein back to the Assessing Officer for examination and not set aside for denovo consideration. Therefore, it is stated that the demand made through the impugned proceedings is maintainable.

4. Learned counsel for the petitioner, after reiterating the above contentions raised by the petitioner, placed his reliance on a decision of the Apex Court reported in 1993 Supp (1) SCC 604 (M.Tsajamoni Amma v. Deputy Commissioner of Income Tax).

5. Per contra, the learned counsel appearing for the respondents, after reiterating the contentions raised in the counter affidavit, submitted that the Company, in which, the petitioner is the Managing Director is a Shell Company and therefore, they are evading the notices issued by the Assessing Officer. Thus, she submitted that in such scenario, the Assessing Officer has no other go except to issue the impugned proceedings against the petitioner in order to protect the interest of the revenue. She further contended that the Gujarat High Court, in a case reported in (2012) 28 taxman.com 111 (Pravinbhai M.Kheni v. Assistant Commissioner of Income-tax, Central Circle-2&2) has considered the issue with regard to the proceedings under section 179 even in respect of a public limited Company and found that the Court can lift the corporate veil in order to do complete justice.

6. Heard both sides.

7. The present impugned order is put to challenge mainly on three grounds. The first ground raised is that the petitioner was not put on notice before passing the impugned order. When such contention is specifically raised by the petitioner, it is the duty of the respondent to place the material and satisfy this Court with regard to service of notice. No material is placed before this Court to substantiate the s